Excessive regulation has created a "hostile" environment for business owners in the United States, curbing liquidity and putting a drag on the economy, billionaire investment banker and business magnate Ken Langone said Friday on CNBC.

"We are in a period of intense and unreasonable regulation and we're seeing the fruits of that environment," said Langone, co-founder of Home Depot, on "Squawk on the Street." "We have to accept the fact that what's going on today doesn't come without cost and the cost is economic growth."

To Langone, heavy regulation has spooked business owners from investing in their companies. So instead of spending excess cash or taking out a loan to hire more employees or update equipment, Langone said many CEOs are choosing to return that capital to shareholders by way of a stock re-purchase or dividend increase.

"It isn't that the banks can't loan the money. It's the borrowers that don't want to borrow the money," Langone said. "What they're not doing is going to invest extraordinary sums of money or any amount of money into an environment that's hostile."